Abstract
This paper examines the determinants and consequences of going public for Chinese private companies during the process of reforms and opening up in China with a full sample that includes 584 initial public offerings (IPOs) of private companies and 584 of non-listed private companies from 2006 to 2014. Our results first reveal that the decision to go public is positively correlated to firm size and the market-to-book (MTB) ratio of the corresponding industry and negatively correlated to financial leverage and firm age. However, when considering the role of rent-seeking activities, the effect of the MTB ratio switches from positive to negative. The evidence also indicates that IPOs have a negative impact on firm performance, although they have a positive impact on the asset liability ratio and total assets afterwards. These findings offer several useful insights for policymakers and researchers.
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